1. What do businesses need finance for?
Sources of Finance
What do businesses need finance for?

2. Learning objectives
To be able to state at least three different sources of finance for a new business.
To recognise the difference between short- term finance and long-term finance.

3. How can businesses finance themselves?
Short term finance
Has to be paid back over 12 months
Long term finance
Can be paid back over many years

4. Internal and External Funding
Internal funding comes from within the business
External funding comes from outside the business

5. Internal funding
How might businesses find funding within themselves?

6. Internal Funding Retained Profit Asset Sales
Keeping profits and saving them to reinvest
Asset Sales
What can they sell?

7. External funding
Share capital
Debt
Bonds
Trade Credit

8. Share capital Businesses can issue shares in a business
Shares are small parts people can own
Dividends (small payments) are made to those who own them
Public Limited companies can trade them on a stock exchange but Private limited companies cannot

9. Debt
Overdraft
Loan
Bonds
Trade Credit

10. Cross Sheet + read

11. Question Sheet Please read the sheet and answer the questions
Extension
Use the case study to answer the questions (p15)

12. Plenary
One form of finance and an advantage!

13. Financing growth
P83 QUESTIONS

14. Why do firms want to grow?

15. Why might a firm want to grow larger?
Make a list or mind map of the reasons why a firm may want to grow larger.
To understand how to finance a business from Internal & external sources

16. Why do firms want to grow?
To understand how to finance a business from Internal & external sources

17. How can firms grow?
The type of integration that firms use will depend on their situation. There are 3 ways it can be done:
Internal Expansion – Expand by opening more outlets or employing more staff
Mergers – Two businesses joining together to form a new or larger company
Takeovers – Where one business buys at least 15% of another business to control it
To understand how to finance a business from Internal & external sources

18. Exam questions